'Decarbonisation is a marathon — it will continue, despite supportive or obstructive US Presidents'

Sam Fankhauser is Professor of Climate Change Economics and Policy at the Smith School of Enterprise and Environment, Oxford University. Speaking to Srijana Mitra Das from COP29 at Baku, Azerbaijan, he discusses routes leading to the global energy transition:

What is the core of your research?

I lo ok at climate policy through an economic lens — I am interested in the most efficient ways of reducing emissions and in also working out where the economic opportunities lie in lowering greenhouse gases. The paradigm has shifted now from talking about adjustment costs and burdens to be shared among nations to the realisation that there are large opportunities ahead — we need to achieve that prize.

Could you explain climate action also being an economic gain?

First, current economies are not fully efficient — there are market failures, barriers and externalities. By addressing climate change, we also simultaneously address some of those other problems. For example, a power sector run by renewables is much more competitive — there are fewer natural monopolies and a more disaggregated sector. Fossil fuel subsidies that still prevail are distorted and costly — by transitioning to renewables, some of those will fall away. Consider public health — moving to renewables will improve that by tackling air pollution, increasing both well-being and productivity. These actions benefit society and economies.

What are the links between the energy transition and poverty?

A big debate exists around poor people in developing economies needing fossil fuels as a way to growth. Having access to modern electricity, which is a Sustainable Development Goal (SDG), certainly fuels prosperity — but modern electricity is no longer fossil fuels. Today, the best way to bring electricity to people is with renewables. Fossil fuel-power has in fact singularly failed to reach very large numbers of people as grid connection is too expensive, demand loads are too small, users are too dispersed, etc. The old power sector thus has an abysmal track record in electrifying poor communities.

In contrast, renewable energy is modular and people can start with small systems, gradually increasing these as demand grows. It’s far more disaggregated with lower connection costs, which makes it more effective in reaching poor people. The story that fossil fuels are needed for economic growth is wrong — what is needed is reliable electricity.

Can you share your research findings on how climate change bodies influence political discourse?

We did this study in the United Kingdom but similar trends are emerging in other countries as well. We found the deep structural reforms an economy has to undertake for the energy transition requires both a legal basis and good governance systems. The latter includes legal and explicit long-term and short-term targets, so there is a clear direction of travel and citizens can hold governments to account, as well as independent bodies, like climate commissions, with the mandate to scrutinise governments.

We draw a parallel with monetary policy — setting interest rates and fighting inflation is usually done by technocrats, not politicians. The latter are short-term in view — technocrats have a longer-term view. Climate policy needs that.

You’re at COP29 — how do you think climate funding will proceed hereon?

The New Collective Quantified Goal for climate finance is indeed a key topic. To summarise it in one word, it’ll progress slowly — it’s much harder than, say, agreements on new Nationally Determined Contributions where there’s leeway for mutually beneficial strategies. A finance target is more complicated and could get slightly disaggregated — there will be the $100 billion target, with an observation that we need blended finance, public money from development finance institutions and governments, private sector debt, risk capital or equity, etc. We’ll see the climate finance landscape evolve now.

How will global climate cooperation proceed alongside Donald Trump?

Decarbonising the global economy by mid-century is a marathon, not a sprint — this is a 60-year journey. It began with the UNFCCC signed in 1992 — 30 years later, we are at the middle, with 30 more years till net zero. In those 60 years, there will be all manner of economic, geopolitical and social issues — we’ve already had a global financial crisis, the pandemic, supportive American presidents, obstructive American presidents, all kinds of leaders, etc. We need climate policy which works across these short-term distractions — we must cut carbon in good times and bad and this holds true for the next four years as well.

Also, the climate community is much more resilient to stress today than earlier — renewables are now even cheaper and more entrenched. It’s very difficult to imagine the market deviating from that, even in a place like Texas which has a lot of wind power because it makes economic sense. The market will overrule politics and sub-nationally, states will overrule federal moves.

Views expressed are personal